Renderings Revealed for Two More Residential Towers in Downtown Brooklyn

Brooklyn Daily Eagle DOWNTOWN BROOKLYN — The renderings have been provided to the Eagle for two new residential developments in Downtown that recently received funding from the state’s Housing Finance Agency (HFA). As the Eagle reported on Wednesday, Dec. 15, the financings and grants will be used to build affordable housing in each of the two towers, and will help create jobs and stimulate the local economy. Additionally, a residential conversion project in DUMBO has received funding from the HFA. Following are the three Brooklyn projects that received funding: • 388 Bridge Street Apartments, between Willoughby and Fulton streets in Downtown Brooklyn, a 234-unit, brand new 49-story multifamily rental apartment building controlled by the estate of Stanley Stahl, which received $94.6 million in financing. Forty-seven of the units will be set aside for tenants with household incomes up to $39,600 for a family of four.  According to Department of Buildings (DOB) records, the ownership is operating as 388 Bridge Street LLC. SLCE Architects is designing the building. • 25 Washington St., between Plymouth and Water streets in DUMBO, a 106-unit, eight-story multifamily rental apartment being converted by Two Trees Management Co., which received $22.2 million in financing. Twenty-one of the units will be set aside for tenants with household incomes up to $39,600 for a family of four.  According to DOB records, the ownership is operating as GAIR 1-2 LLC. Wank, Adams, Slavin Architects is designing the conversion. • 29 Flatbush Ave., at Nevins Street in Downtown Brooklyn, a 333-unit, brand new 44-story multifamily apartment building controlled by The Dermot Company, which received $99 million in financing. Sixty-seven of the units will be set aside for tenants with household incomes up to $39,600 for a family of four. According to DOB records, the ownership is operating as 29 Flatbush Associates LLC. Ismael Leyva Architects is designing the building.

How to find distressed real estate | The Real Deal | New York Real Estate News

Eight steps to getting in on properties and notes

December 01, 2010 07:00AMBy C. J. Hughes

Shopping for distressed buildings isn't as easy as pointing and clicking through a listing service -- or is it? Investors who have picked up projects that ran out of money before construction was complete or simply couldn't keep pace with their bank payments -- read: distressed assets -- shared how-to advice with The Real Deal that contains a surprising amount of common sense.

Yes, the average real estate Joe might not be able to waltz into a corner bank and demand to see what troubled notes it holds. Instead, distress investing, like many high-level business propositions, seems to require membership in a clubby circle. Still, picking up a half-built, low-rise rental for a song may be in the realm of possibility.

Here are some basic avenues of attack:

1. Call brokers
Seems obvious, maybe, but unlike buying a short-sale home, you can't always just pull up a brokerage's website and check out a listing that's in financial trouble. Plus, banks usually won't take unsolicited calls. Note sales -- when an owner is forced to sell the property that secures a mortgage because he can no longer afford to make payments on it -- are not typically recorded in the public record in any clear-cut way.

Eastdil Secured, Massey Knakal Realty Services and Jones Lang LaSalle are in the know about possible New York deals, said Morris Moinian, president of Fortuna Realty Group, which has invested in troubled buildings during past downturns. Also, chatter among developers suggests that Grubb & Ellis "has been very successful at these types of transactions," he said.

2. Look beyond Manhattan
Great deals can be had in the outer boroughs from agents who might double as insurance salesmen and travel agents in "one- or two-man shops," said Bob Knakal, chairman of Massey Knakal, which has seen distressed sales spike from 4 percent of its total business in 2009 to 20 percent this year.

"The smaller brokers will be able to source transactions that might not be widely marketed," Knakal said. Plus, with less competition for these properties, "they could present a better buying opportunity." And there's no complex science behind tracking down these mom-and-pop shops, Knakal said, who adds that one might luck upon them on, say, a drive through Queens, with eyes peeled for brokerage signs on storefronts.

3. Scour banks' websites
Most real-estate owned, or REO, properties that are advertised on the websites of major retail banks are individual homes. But, brokers point out, Bank of America's website offers commercial properties, too, with a menu that seems easy to use, even if local offerings appear thin. Indeed, selecting "commercial -- office" and "commercial -- apartments/condos" yielded no results for Manhattan. (Individual condos in Brooklyn did turn up, though.)

Rick Simon, a spokesperson for the bank's mortgage team, said the listings migrated to the site after the 2008 purchase of Countrywide Financial, and that anecdotal evidence suggests that the listings are popular with buyers, though he had no specific site traffic numbers.

4. Tap relationships with previous lenders
"Let's say client seven goes under. They may offer client eight to come in and take a look," said Moinian, who has been in that eight position himself. This is especially true at smaller banks, where personal relationships are more typical than at "UBS and Credit Suisse and so forth and so forth," he said. But being in New York is a good thing -- there is more money in the city because there are solid developers with good track records.

5. Develop different relationships at the same bank
"One of the most difficult things to figure out is who to speak to" at a bank, said Knakal, who recommends cultivating contacts in all the departments that a piece of real estate might bounce through, whether special assets, note sales, or REO.

In the course of dealing with people at a lender, a buyer might discover that "all of a sudden the bank has foreclosed, and the note has been handed off from a workout group to the REO area," he said. "If you don't have a relationship with that person, you can lose track of that property."

6. Demand a discount
If a meeting does eventually take place, consider that buying most foreclosed properties in New York requires paying a 2.8 percent transfer tax, plus other steep carrying costs. "If the bank is not giving you the deed at par, you need a discount to make the numbers work," said Sam Suzuki, a Bronx landlord who is attempting to reinvent himself after legal troubles by raising a distressed fund.

7. Prepare to pay in cash
Buying bad mortgages isn't usually done with other mortgages, as banks don't really crave the possibility of putting underperforming assets on their books, so expect to seal the deal in cash. If financing is used for the deal, meanwhile, buyers shouldn't expect loans to cover more than 50 percent of the cost, Knakal adds. And that financing will likely come from "a hard-money lender or a fund, or a lender who is looking beyond cash flow."

8. Read all documents carefully
Many parties, like insurance companies and loan servicers, can have ownership stakes in distressed buildings, so poring through the paperwork to find out who's owed what is essential. "You have to deal with all these unintentional owners," said Noble Carpenter, who runs the loan-sale business at Jones Lang LaSalle. "Understand the fundamentals." And check out real estate data websites like PropertyShark, which has the names of lenders, as well as information about liens, attorneys and title histories.

U.S. existing home sales trend upward | The Real Deal | New York Real Estate News

U.S. existing home sales trend upward | The Real Deal | New York Real Estate News

Google Sets Business Focus in Chelsea

• DECEMBER 23, 2010
• By DANA RUBINSTEIN

Brian Harkin for The Wall Street Journal

A parking station for scooters used by employees moving around inside the building.

Google Inc. closed on the $1.9 billion purchase of its New York headquarters Wednesday in a deal that's become a powerful symbol of how th e technology sector is helping to shore up the city's economy.

The technology and Internet company established a beachhead in New York in 2000 with one worker based in a Starbucks on 86th Street and Columbus Avenue. Today it has 2,000 employees in Chelsea, most of them spread over several floors in the cavernous office building the company just purchased at 111 Eighth Ave.

Google executives decline to discuss their expansion plans in the city. But people familiar with the deal say the tech giant intends to keep growing here, taking advantage of its proximity to business users on Wall Street and Madison Avenue, and the lack of strong competition for talent from other tech companies mostly based on the West Coast.

Inside Google's NYC Headquarters

View Slideshow

Brian Harkin for The Wall Street Journal

Two older model computers - including an Atari system at right - inside the 'computer museum.'

"The tech scene is different here," says Alan Warren, a Google engineering director in New York. "We are a lot more connected to business users, as opposed to consumer business."

The Google deal comes at a time that the New York technology sector is growing, not an easy feat in today's economy. Since November of last year, the information technology sector has gained 2,700 jobs in the city, according to state labor statistics. That's an increase of 6%, more than making up for the 1,600 jobs it lost between November 2008 and 2009. By comparison, the city's overall private sector grew 1.6% between November 2009 and last month.

Tech start-ups here include Foursquare and Hashable, companies tied to the social-networking boom. Companies that are expanding here include Gilt Groupe, an online luxury retailer founded in 2007.

The city's tech sector, often referred to as "Silicon Alley," employed 47,700 people in November. While that's well up from November 2003 when sector employment totaled 33,700, it's still below its peak of 50,200 in November 2000, at the height of the tech boom.

Google already is the largest tenant in 111 Eighth Ave., a three-million-square-foot behemoth that's popular with technology companies because of its high ceilings, load-bearing floors and location along a fiber conduit that runs on the West Side.

"Google's growth can now be organized without the normal Manhattan impediment of space constraints that often interfere with expansion plans," says Douglas Harmon, the broker at Eastdil Secured, which represented the seller in the Google building purchase.

Brian Harkin for The Wall Street Journal

Google has closed on the $1.9 billion purchase of New York offices at 111 Eighth Ave. in Chelsea.

When Google set up shop in the city in 2000, its employees dealt only in advertising. Later the operation branched into engineering operations and further expanded as executives recognized that New York City hosted a talent base uninterested in moving to Silicon Valley.

Given the importance of ad sales to Google's bottom line, the company also appreciated its proximity to advertising firms, especially after Google acquired New York-based DoubleClick.

"Silicon Alley is right next to Madison Avenue," says Brad Bender, a former DoubleClick employee who joined Google following the 2008 acquisition. "There's a lot of cross-pollination."

The staff in Chelsea works on more than 100 projects, including Google Docs and Google Finance. The Eighth Avenue space has much in common with a college student union.

The office's fourth floor is strewn with Razor scooters, and free food for employees is available every 150 feet. There is also a game room, where employees play ping pong, shoot pool, watch TV and relax with laptops on massage chairs. Elsewhere, there's a Lego area and a computer museum with old models including a Commodore Pet.

The office conference rooms are named for New York City landmarks and the printers are named for subway stations. On one floor, there's a jungle-themed kitchen, complete with fake vines, a cave and a hammock.

Bushwick is the new Williamsburg

BY ANDY CAMPBELL

The Brooklyn Paper

Williamsburg is known for its superb cuisine, old-school aesthetic, killer nightlife, and, now, exploding rent prices, tourists and trust-fund babies. So what’s a hipster to do? Pack up the ramen noodles and head to Bushwick.

Census figures released this week show that Bushwick — which in some areas is still 65-percent Hispanic — is becoming a haven for middle- and lower-class whites. That population has grown more than 15 percent in the 10 years, and its income is declining rapidly — median incomes top out in the upper $30,000s. And some areas of Bushwick have median incomes as low as $19,000, an 18-percent decline over the past decade.

It’s the artists, college students and growing families that are gentrifying — or de-gentrifying — Bushwick these days.

“This is a real affordable artist community, a lot like Williamsburg used to be,” said Dani King, a two-year Bushwick resident who was cast out of Williamsburg by rising rents. “Williamsburg is too freaking expensive. Here, there’s space, and artists are everywhere. It’s just got that vibe now.”

Like the young pop-up community before it, Bushwick attracts musicians and vagabonds alike with its phenomenal real-estate prices and location. Indeed, it keeps the young crowd on their beloved L train from Grand Street to Myrtle and Wyckoff avenues, and it’s a buyer’s market in terms of real estate — rent is on the rise just like everywhere else, but the median monthly price for a home is as low as $550 in some areas.

Try getting that in Williamsburg, where rents have shot up as much as 30 percent. Heck, brokers are even calling parts of the warehouse-heavy neighborhood, “East Williamsburg” on their advertisements.Billyburg is so 2002.

“We came out to Bushwick because this is the last spot to get a lot of space for such a good price — plus, a lot of the artists were already out here,” said Jessica Tom, director of marketing and events for the 3rd Ward art space in Bushwick. “The neighborhood has this raw, fresh energy. We recognize that Bushwick might be far out of the way now, but we wouldn’t be able to grow if we were in Williamsburg.”

10 Things Charter Schools Won't Tell You

1. We're no better than public schools.  

For all the hype about a few standout schools, charter schools in general aren’t producing better results than traditional public schools. A national study by the Center for Research on Education Outcomes at Stanford found that while 17% of charter schools produced better results than neighborhood public schools, 37% were significantly worse, and the rest were no different.  A 

host of other studies on charter school outcomes have come up with sometimes contradictory results. As with traditional public schools, there are great charters – and some that aren’t so great. “There’s a lot of variation within charter schools,” points out Katrina Bulkley, an associate professor of education at Montclair State University who studies issues related to school governance. “In fairness to organizations that are running high-performing schools, many of them are very frustrated with the range of quality, because they feel that it taints charter schools as a whole,” Bulkley says.

2. Our teachers aren’t certified.

For all the hype about a few standout schools, charter schools in general aren’t producing better results than traditional public schools. A national study by the Center for Research on Education Outcomes at Stanford found that while 17% of charter schools produced better results than neighborhood public schools, 37% were significantly worse, and the rest were no different.   A host of other studies on charter school outcomes have come up with sometimes contradictory results. As with traditional public schools, there are great charters – and some that aren’t so great. “There’s a lot of variation within charter schools,” points out Katrina Bulkley, an associate professor of education at Montclair State University who studies issues related to school governance. “In fairness to organizations that are running high-performing schools, many of them are very frustrated with the range of quality, because they feel that it taints charter schools as a whole,” Bulkley says.

3. Plus, they keep quitting.

As many as one in four charter school teachers leave every year, according to a 2007 study by Gary Miron, a professor of education at Western Michigan University, and other researchers at the Great Lakes Center for Education Research and Practice. That’s about double the typical teacher turnover rate in traditional public schools. Charter schools typically pay teachers less than traditional public schools do, and require longer hours, Miron says. Meanwhile, charter school administrators earn more than their school-district counterparts, which can also make teachers feel underpaid, he says. The odds of a teacher leaving the profession altogether are 130% higher at charter schools than traditional public schools, according to a 2010 study by the National Center on School Choice at Vanderbilt University. That study also found that much of this teacher attrition was related to dissatisfaction with working conditions.  Higher turnover is inevitable with a younger staff – and the ability to get rid of ineffective teachers, says Peter Murphy, a spokesman for the New York Charter Schools Association. “There needs to be more turnover in district schools,” Murphy says. “Instead, what you have is this rigid tenure system where teachers are not held accountable, and children suffer.”

4. Students with disabilities need not apply.

Six-year-old Makala was throwing regular tantrums in school, so her mother, Latrina Miley, took her for a psychiatric evaluation, eventually ending up with a district-mandated plan that stated the girl should be taught in a smaller class where half the students have special needs. The charter school’s response, Miley says, was to tell her she could either change her daughter’s educational plan, or change schools. She moved Makala to a nearby public school – where, she says, teachers have been more effective at managing her daughter’s behavior issues. The school says it can’t talk about specific cases.  Critics say charter schools commonly “counsel out” children with disabilities. While a few charter schools are specifically designed to serve students with special needs, the rest tend to have lower proportions of students with special needs than nearby public schools, according to a review of multiple studies conducted by the University of Colorado’s Education and the Public Interest Center. Charter schools also appear to end up with students whose disabilities are less expensive to manage than those of public school students. A Boston study, conducted by the Massachusetts Teachers Association, found that 91% of students with disabilities in the city’s charter schools were able to be fully included in standard classrooms, compared to only 33% of students with disabilities in the traditional public schools.

5. Separation of church and state? We found a loophole.

Charter schools are public schools, supported by public tax dollars. But among the thousands of charters nationwide are schools run by Christian organizations as well as Hebrew and Arabic language academies that blur the line between church and state. “What would not be tolerated in a regular public school seems to be tolerated when it’s a charter school,” says Diane Ravitch, a professor of education at New York University and the author of “The Death and Life of the Great American School System.” Even if these schools aren’t explicitly teaching religion, “it’s potentially segregation by religious preference,” Bulkley says.

6. We don’t need to tell you where your tax dollars are going.

An investigation by Philadelphia’s City Controller earlier this year uncovered widespread financial mismanagement among the city’s charter schools, including undisclosed “related party” transactions where friends and family of school management were paid for various services, people listed as working full time at more than one school, individuals writing checks to themselves, and even a $30,000 bill from a beach resort charged to a school.  Financial scandals have come to light in schools around the country, but what’s more troubling, says advocate Leonie Haimson of Class Size Matters in New York City, is that charter schools have opposed state audits of their finances. The New York Charter School Association won a lawsuit against the state comptroller last year, with the court ruling that the legislature had violated the state constitution when it directed the comptroller to audit charter schools. Charter schools in the state are already overseen and audited by at least two other agencies, Murphy says. “We have never objected to being audited, being overseen, and being held accountable. In fact, this organization has come out in favor of closing low-performing charter schools,” he says.

7. We’ll do anything to recruit more kids…

Walking around New York City, it’s impossible to miss the ads on buses and subways for the Harlem Success academies, Haimson says. The school is legally required to reach out to at-risk students, and it has been opening new schools over the past couple of years. However, some schools elsewhere have gone beyond marketing. A charter school in Colorado gave out gift cards to families that recruited new students, and another school in Louisiana gave out cash.

8. …but we’ll push them out if they don’t perform.

The Knowledge is Power Program (KIPP) schools have been criticized for high rates of student attrition, in part because it’s the struggling students who are more likely to leave schools mid-year – so if more students leave charters, that churn could boost a school’s scores. A KIPP study released in June found students leaving at rates comparable to the rate at which students leave traditional public schools – but, according to Miron, that study ignored the fact that KIPP schools don’t then fill empty slots with other weak, transient students the way traditional public schools do. “Traditional public schools have to take everybody,” Miron explains. “Charter schools can determine the number they want to take and when they want to take them, and then they can close the door.”  Miron found there was a 19% drop in enrollment in KIPP schools from grades 6 to 7, and a 24% drop from grades 7 to 8. Some charter schools lose 50% of a cohort each year, Miron says. And in some cases, students can be explicitly pushed out of a charter school for failing to meet the school’s academic or behavioral standards – an option that’s not available to a traditional public school.

9. Success can be bought.

Some of the most successful charter schools are also some of the wealthiest. Harlem Children’s Zone, for example, had over $193 million in net assets at the end of the 2008-2009 school year, according to its most recent IRS filing. The organization’s charter schools spend $12,443 per student in public money and an additional $3,482 that comes from private fundraising. That additional funding helps pay for 30% more time in class, according to Marty Lipp, spokesman for the organization.  It’s great to see schools that have the resources to spend lavishly to help children succeed, Bulkley says, but it’s difficult to see how those schools can then be models for traditional public schools largely constrained by traditional public budgets. “All schools should get what they need,” Lipp says, but adds, “You give two people $10 and they spend it different ways, so it’s not simply about money.”

10. Even great teachers can only do so much.

Much of the public debate over charter schools focuses on teacher performance and the ability to fire ineffective teachers – something that’s more difficult at a traditional public school where teachers are typically union members. While it’s true that teachers represent the most important in-school factor affecting student performance, out-of-school factors matter more, Ravitch says. “The single biggest predictor of student performance is family income,” she says. “I certainly wish it were not so, but it is.” Children from higher-income families get a huge head start thanks to better nutrition, a larger vocabulary spoken at home and other factors, she says. The narrative that blames teachers for problems that are rooted in poverty “is demoralizing teachers by the thousands,” Ravitch says. “And you don’t improve education by demoralizing the people who have to do the work every day.”

Are You Buying Into a Good Neighborhood?

Are You Buying Into a Good Neighborhood?

IF THERE'S A bright spot in the recent housing market meltdown, it's that buyers once priced-out of nice houses or good school districts may now be able to afford their target locales. But with foreclosures and short sales spreading, how does a buyer know if that coveted town is still as great as it once was?

Quality of life in the suburbs has particularly suffered, experts suggest. Once the destination for parents eager for a kinder, gentler environment in which to raise their kids – and send them to good public schools – many suburbs no longer offer the same safety, quality of life or schools, according to a recent study from the Brookings Institution. For the first time ever, the number of people living in poverty in the 'burbs exceeds that in central cities. "We're seeing a radical transformation," says Chris Leinberger, visiting fellow at the Brookings Institution, a nonprofit public policy center and real estate professor at the University of Michigan. Buying in the suburbs is no longer a sure bet.
There are two major culprits for the declines of thousands of once-attractive towns and hamlets: falling property values in general, and foreclosures in particular. Home values lead to property taxes, which in turn generate money to pay for public school programs, well-maintained roads, and public safety. Cities' property tax collections are projected to drop 5% this year, and municipalities aren't making up the shortfall: Sales tax collections are also likely to be lower, and overall city revenues are expected to fall by 3.2%, the largest drop since the 1980s, according to the National League of Cities, a nonprofit association of cities and state municipalities. Although foreclosures contribute to the decline of property values (and taxes) overall, they have an outsized impact. On average, home property values drop 0.9% when they're within one-eighth of a mile from a foreclosed single-family residence, according to the Woodstock Institute, a research group, and the Georgia Institute of Technology. And real estate analysts are projecting that 2011 will be the worst year for foreclosures since the housing downturn began.

The total effects of the foreclosure crisis won't be felt for years, of course. And for buyers eager to nest, the risks may be acceptable, especially in light of the prices: Since 2007, median home prices have dropped 35% in Stamford, Conn.; 27% in San Francisco; and 21% in Alexandria, Va., according to the National Association of Realtors. There are also 1.2 million homes in pre-foreclosure, where the owner has received a default notice or has been scheduled for auction, according to RealtyTrac.com, and they might prove a worthwhile bargain.

If those low prices are persuasive enough, here are three things to consider when determining if a desired neighborhood is still a keeper.

Crime:
The very crisis that's made homes affordable has also corresponded with a spike in crime. A foreclosure rate of 3% leads to a 7% increase in crime, in all different kinds of neighborhoods, according to the Woodstock Institute and the Georgia Institute of Technology. "Vacant properties can serve as magnets for criminal activity," says Geoff Smith, senior vice president at Woodstock. Visit the local police precinct and ask for the area's crime stats – this is public information – and ask an officer whether specific pockets of a neighborhood have recently experienced a spike in crime, says Jack McCabe, an independent real estate consultant. Not all crimes are equally disturbing: An increase in pedestrian and vehicle stops would indicate more diligent enforcement, while a rise in property-related crimes, like breaking and entering, and thefts of vehicles, partly suggests there might be cutbacks in the police force.

Schools:
If property tax collection is down, past accolades for a town's schools — like the stellar violin program and the long roster of Advanced Placement classes — might be outdated. Approximately 66% of schools plan to cut faculty positions for the 2011-2012 academic year, up from 48% this year, according to the American Association of School Administrators, and 68% of classrooms will be considered crowded next year, up from 57% currently. Parent-teacher association meetings provide the most information on any major problems, like extracurricular cutbacks or a teacher shortage, if they exist. A school's academic standing and standardized test scores – and, in some cases, up-to-date reviews from parents – can be researched online at national sites, like City-Data.com, GreatSchools.org and SchoolDigger.com, which list average scores by grade and subject, compare scores to previous years and allow parents to compare those to schools in nearby towns.

Public Services:
What good is a three-bedroom a block from the playground, if the swings are busted and the teeter-totter is rusty? When a local government cuts back, the extras like playgrounds, libraries and parks are the first to suffer. As it is, 62% of cities are delaying or cancelling capital projects, 14% are instituting public safety cuts, and 87% are expected to fall short of their fiscal needs, almost triple the number pre-recession, according to the National League of Cities. Local public libraries, which are typically funded by the town, are particularly vulnerable, says John Vogel, adjunct professor of real estate at Dartmouth's Tuck School of Business. Ask a librarian if the library is cutting its hours of operation or planning to. Also, visit local parks, where broken swings or un-mowed grass may signal tighter budgets. Go for a walk and chat with people on the street and in the park; they are likely to provide the most candid answers, says Vogel.